PulteGroup 4Q Loss Widens On Hefty Charges

LOS ANGELES (AP) - Homebuilder PulteGroup Inc. on Friday expressed guarded optimism that sales trends so far this year could signal improved home sales this spring.

CEO Richard Dugas Jr., said the homebuilder saw encouraging levels of traffic from prospective buyers and sales last month. That could bode well for the spring, traditionally a strong season for home sales.

"We need a lot more than four weeks in January to determine how the selling season and the year will ultimately develop," Dugas said. "Still, getting off to a strong start would be a very positive sign, especially given the absence of any government stimulus this year."

Homebuilders got a helping hand from Uncle Sam last year in the form of federal tax credits for homebuyers. The government incentive helped stoke sales until it expired in April. Sales tanked afterward and 2010 ended as the worst year for new home sales since at least 1963.

PulteGroup saw its home closings and new home contracts tumble in the fourth quarter, echoing sales declines reported in recent weeks by other large homebuilders.

But coming off a dreadful 2010, homebuilders are hoping the spring season, which really begins in earnest in February, will buoy their lagging sales.

Earlier this week, another homebuilding executive, Standard Pacific Corp. CEO and President Ken Campbell, noted sales in January were running at a faster clip than just a few months earlier.

"What does that mean for the year? It looks like we're going to have a spring selling season is what," Campbell said.

The executive doubts sales this spring would eclipse last year's, however.

"But if it was just as good as last year, that would be pretty good, given that we're doing it without support," he added.

Homebuilders are a bellwether for the housing market and the economy. Each new home built creates, on average, the equivalent of three jobs for a year and generates about $90,000 in taxes paid to local and federal authorities, by some estimates.

But the industry has been struggling as high unemployment, tight credit and uncertainty about home prices keep many would-be buyers on the sidelines despite mortgage rates remaining at near-historic lows.

Sales improved in November and again in December, but not enough to lift results for several major builders.

In recent weeks, KB Home, Lennar Corp., D.R. Horton Inc., and Standard Pacific all reported sharp drops in home deliveries and contracts for new homes during their latest quarters. Meritage Homes Corp. bucked that trend, reporting this week a 15 percent jump in new home orders, but the increase appears to have been fueled by heavy discounting. And its home deliveries sank 30 percent.

PulteGroup's closings dropped 29 percent, while net new orders fell 19 percent on 11 percent fewer open communities than in the prior-year quarter.

The average selling price of its homes edged up 2 percent to $262,000.

Dugas said the fourth-quarter orders were in line with holiday season slowdown in demand.

But the decline didn't help the builder's quest to get out of the red.

The Bloomfield Hills, Mich., company reported a loss of $165.4 million, or 44 cents a share, for the period ended Dec. 31. That compares with a loss of $116.9 million, or 31 cents a share, a year earlier.

The quarter included $196 million in land-related charges and costs related to its restructuring, paying down debt and other financing amendments completed in the quarter.

Analysts surveyed by FactSet, whose estimates usually remove one-time items, expected a loss of 9 cents a share.

Revenue dropped 32 percent to $1.19 billion from $1.73 billion, but still surpassed Wall Street's $1.13 billion.

Shares of the company lost 5 cents to $7.49 in afternoon trading.

PulteGroup operates in 29 states and the District of Columbia. Its Del Webb brand is the nation's largest builder of communities for adults age 55 and over.

For all of 2010, the builder's loss narrowed to $1.1 billion, or $2.90 per share, from a loss of $1.18 billion, or $3.94 per share, in the previous year.

The company said its 2010 earnings-per-share results were based on 379 million shares outstanding, higher than the year-earlier amount as additional shares were issued for the 2009 acquisition of Centex Corp.

Full-year revenue improved to $4.57 billion from $4.08 billion.

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